How Neo-Liberalism Made The World Richer: Not

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Huzzah for Neo-Liberalism, the poor have manna from heaven, rejoice!

Oh no who’s rattled my cage this time? A Twitterer that’s who and this specifically.

Aaron Friel @AaronFriel Replying to @AlisonB916 @Noahpinion

Tell me again how the neolibs have ruined everything over the last 40 years.

The Tweet is where I got the chart above from and I have no idea what has made me more cross. The fact I don’t know whether the author is being ironic or not or whether he’s really using a report of extreme inequality to praise neo-Liberalism. For the purposes of this piece I’m going to assume the Tweet is sincerely meant although I’m surely it’s a joke I’m not in on, I thought irony was illegal in America.

First of all I’d like to make it clear that I have never believed in throwing out the baby with the bath water but that chart is an absolutely perfect example of Neo-Liberals only telling you that part of a story they’d like you to hear. Those of us with a tendency to rail against NL tend to do so from a national point of view but this ignores some of the International good that has undoubtably occurred over the last 40 years. According to the populists, using false correlation with zero corroborating evidence, that growth internationally has come at the expense of us in the west. The populists adopt exactly that same tactic as the NLs by telling only part of a story, they point to the low wages and terrible working conditions in emerging markets as a race to the bottom and this is partially true. Most of the problems in the West have been caused by truly terrible domestic policy.

So what exactly is that chart telling us? It tells us that we have record low child starvation and mortality, what’s not to like about that? This is how international poverty is measured. “The World Bank is the main source for global information on extreme poverty today and it sets the International Poverty Line. The poverty line was revised in 2015—since then, a person is considered to be in extreme poverty if he or she lives on less than 1.90 international dollars (int.-$) per day. This poverty measurement is based on the monetary value of a person’s consumption. Income measures, on the other hand, are only used for countries in which reliable consumption measures are not available”. (source). Today there are around a billion people still living on $1.90 or less or around 10% of the population, still some way to go yet and ammunition to keep foreign aid flowing.

There is a temptation to think that all this growth abroad is about China But Noah Smith via Twitter has this chart.

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  • In 1800 only few countries achieved economic growth. The chart shows that the majority of the world lived in poverty with an income similar to the poorest countries in today. Our entry on global extreme poverty shows that at the beginning of the 19th century the huge majority – more than 80% – of the world lived in material conditions that we would refer to as extreme poverty today.

  • In the year 1975, 175 years later, the world has changed – it became very unequal. The world income distribution has become bimodal. It has the two-humped shape of a camel. One hump below the international poverty line and a second hump at considerably higher incomes – the world was divided into a poor developing world and a more than 10-times richer developed world.

  • Over the following 4 decades the world income distribution has again changed dramatically. The poorer countries, especially in South-East Asia, have caught up. The two-humped “camel shape” has changed into a one-humped “dromedar shape”. World income inequality has declined. And not only is the world more equal again, the distribution has also shifted to the right – the incomes of the world’s poorest citizens have increased and poverty has fallen faster than ever before in human history. (Source Max Roser (2017) – ‘Global Economic Inequality’. Published online at OurWorldInData.org.)

Well that seems pretty conclusive doesn’t it? I know what all the above is, it’s facts and facts stink. Yes the academic point has been proven, worldwide poverty has fallen but what else has been happening in all that time? It’s worth remembering that those facts above describe one variable only (income) and this strikes me as a typical NL story in that there’s only a small portion of it told. Oxfam also has some facts to share with us, “Eight billionaires own the same wealth as the 3.6 billion people who form the poorest half of the world’s population”. Now I’m not suggesting for one moment that the academics and laymen alike aren’t aware of the very well publicised Oxfam report, what I’m suggesting is that, that chart at the start of this piece has nothing to do with Neo-Liberalism, nothing, zilch and nada. I’m nothing short of scandalised that a chart funded by Nuffield Trust should be used to make such a false statement.

As economies open up the NLs swooped in to overload them with debt, create a few more billionaires to control the masses and take advantage of appalling working conditions. Poor wages and lesser to non-existent environmental controls, the Oxfam report continues “As growth benefits the richest, the rest of society – especially the poorest – suffers. The very design of our economies and the principles of our economics have taken us to this extreme, unsustainable and unjust point”. Here are the bullet points from the report.

 Since 2015, the richest 1% has owned more wealth than the rest of the planet.
 
 Over the next 20 years, 500 people will hand over $2.1 trillion to their heirs
 a sum larger than the GDP of India, a country of 1.3 billion people.
 The incomes of the poorest 10% of people increased by less than $3 a year between 1988 and 2011, while the incomes of the richest 1% increased 182 times as much.
 
 A FTSE-100 CEO earns as much in a year as 10,000 people in working in garment factories in Bangladesh.
 
 In the US, new research by economist Thomas Piketty shows that over the last 30 years the growth in the incomes of the bottom 50% has been zero, whereas incomes of the top 1% have grown 300%.
 
In Vietnam, the country‟s richest man earns more in a day than the poorest person earns in 10 years.
What is happening to Wages in then UK?
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And the US in this fine Neo-Liberal era?
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Am I over-reacting to a badly worded Tweet?   I don’t think so, obviously, because I strongly believe there is a massive difference between Capitalism and Neo-Liberalism, as big a gulf in fact with full on Socialism, nationalisation of the means of production and all. Casually tweeting out that those nice NLs have helped starving ickle kiddies is exactly the same as claiming Al Capone was a nice guy because he sent flowers to his sweet mama on her birthday. any relationship between capitalism and Neo-Liberalism is purely coincidental. Ah, but do you have a chart that proves you’re right Mr40? Indeed I do.
1pi
I shall leave the last word to the band Yes, an understated prog rock band.
As he spoke my spirit climbed into the sky
I bid it to return
To hear your wonderous stories
Return to hear your wonderous stories
Return to hear your wonderous stories

 

 

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4 thoughts on “How Neo-Liberalism Made The World Richer: Not

  1. From memory one family is not mentioned in the top 8 billionaires and that just happens to be the Rothchilds.
    Again from memory their wealth came to 5 times the wealth of the top 8 added together.
    My favourite prog rock band – Necromandus
    Grew up with these guys, way before their time

    Liked by 1 person

  2. I have seen a figure of $5 trillion mentioned , but when you control the Central Bank System via the Bank of International Settlements in Basel, there is no limit to your wealth. You can print fiat money to your hearts content

    Liked by 1 person

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